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Assignment help 5777

Mosler Company has compiled this information for a new project:

Initial investment: $229,700

Fixed costs: $66,800

Variable costs: $5.07 per unit

Selling price: $12.99 per unit

Discount rate: 14 percent

Project life: 4 years

Tax rate: 34 percent

Depreciation is straight-line to zero over the project’s life. What is the accounting break-even point?

11,301.82 units

13,200.00 units

15,684.97 units

10,352.08 units

12,388.60 units

2) Southern Goods is analyzing a proposed project using standard sensitivity analysis. The company expects to sell 4,500 units, ±11 percent. The expected variable cost per unit is $13 and the expected fixed costs are $12,000. Cost estimates are considered accurate within a ± 5 percent range. The depreciation expense is $5,000. The sale price is estimated at $22 a unit, ±2 percent

What is management’s best guess of contribution margin value?

a. $ 2.67

b. $ 10.33

c. $9.00

d. $7.00

e. $8.72


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